U.S. property/casualty insurers should expect disruptive changes in a number of areas in 2016, including technology, pricing, customer demand, and “heightened regulatory creep,” EY said in a new report.

“Insurers that stay ahead of these shifts should reap substantial benefits, while laggards risk falling behind or even out of the race,” the EY industry outlook report noted.

EY said insurers should confront the looming transformational changes planning for what is to come.

“Refining legacy products and approaches is not enough,” the report concludes. “What is required is a fresh outside-in approach that starts with the customer and carriers through to digital trends and market shifts, both inside and outside the industry.”

EY ranks the major outside elements that it sees impacting the market in 2016, with 10 representing the highest impact, and 0, the least. Here’s a breakdown of the major rankings with an explanation behind each:

• Technology. EY rates this one a 10 in terms of impact over the coming months. That’s because digital technology, including social media, telematics, and analytics are likely game changes, with expectations it will affect business areas including marketing and distribution, to customer service and pricing models.
• Pricing. This trend gets a 9 ranking. As EY explains, insurers will need to rethink pricing models in an age of pay-as-you-go market appeal and greater use of customer-focused analytics.
• Customer expectations. This earns an 8 ranking in terms of impact, due to technological changes in other industries that rely on web-based customer service. EY said that this will be big, in large part due to customers comparison shopping on the web as they seek more personalized experiences from insurers.
• Economy and interest rates. With a 6 ranking, the expectation is for a more moderate impact versus the previous three factors, but it is still a big deal. EY noted that there is a prediction of modest economic growth in the months ahead, a trend that could be adversely affected by global volatility and the resulting uncertainty. As well, low U.S. interest rates are still a factor, pressuring underwriting.
• Regulations. With a 5 ranking, the impact of government regulations is likely to have a solid impact. EY said that “heightened regulatory creep” is generating a bigger concern. EY warns that insurers will need to assess how changing regulations might impact them, and plan for a greater impact in 2017 after the U.S. elections.

One final element: catastrophes. EY gave this one a 2 ranking, noting that moderate catastrophe activity continues to keep downward pressure on pricing. One variable: a very large and unexpected event, or events, could change the market.

“After years of relative calm, a big loss event could be more likely,” EY wrote.